"The rating actions reflect the uncertainty surrounding the credit facility renewal and, if renewed, the potential implications of a secured credit facility which would structurally subordinate bond and preferred stock holders."
BAC is asking LTC mgmt to go to the bond and prfd holders and in essence asking them to structurally subordinate themselves to the new credit facility. It is possible for those parties to agree if they believe it is in their interest to do so.
What does this mean? BAC does not believe in the valuation of assets to be there in the event of a downturn in healthcare again and are unwilling to do a refi w/o obtaining senior creditor status or as high as they possibly can.
As to your analysis of the MT situation. I am of the belief that debt will move from the healthcare side to the lodging side when all is said and done. Any debt moving to the lodging side will be seen as a huge overhang on the stock's ultimate valuation once this process is completed. It does not matter how much debt is being reduced right now...today. It is the debt load that LQ inherits from the healthcare side that is the name of the game right now. Until LQ can show what its ops will look like post healthcare no one is willing to put a solid NAV on the successor MT. There are a lot of well educated guesses but nothing solid until healthcare has been entirely disposed of. LQ is not exactly a primo asset and it was overpaid for given today's operating environmt.